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Commodities are the basis or the raw materials in producing or making other products. There are a few fields which the commodities are profitable. A few examples of the fields are agricultural, metals and energy. For agricultural, we have wheat, corn, and soy where in each field, there are many commodities that have long been used as trading. For metals, we have gold, silver, and copper while for energy, we have crude oil, natural gas and heating oil. Across the globe, every producers have come into a consensus of the basic grades for the commodity which is known as the basic grades. These basic grades enable the commodities to be interchangeable. Besides, with the presence of these basic grades give each and every type of commodity a value that can fluctuate with the global market’s movement. The investment arises due to this movement where people start to have money trading commodities and commodity securities. There are many things to understand for you to start investing in commodity but worry not since in this article, you are going to learn the best way to invest in the commodity which is very simple and easy to follow. Let’s get started.
1 . Find Out The Amount For Your Investment
You are basically are going to directly jump into the market without knowing your capital. How much are you going to spend? That should be the first thing on your mind before you are going to start investing. You need to be aware that commodities market are one of the high-risk investments since its large gains are balanced by large potential losses too. However, since the fluctuations are uncorrelated with others, it can reduce overall risk.
2 . Get Yourself A Brokerage Account
To start trading in commodities or any other securities, you need to seek help from the stockbroker to create an account for you. This account is used to hold and trade securities. However, if you are going for investment in physical commodities such as buying and storing gold on your own, you don’t have to get yourself a brokerage account.
3 . Deposit Money Into Your Brokerage Account
This is your first investment so how much money you should deposit? It is all up to you. My only advice here is that you should take the lowest risk by putting in a small sum of money first. This commodities market is basically alien to you. It is unknown and still mysterious. You still don’t have enough idea on how it works with you. The best way for you is to slowly and gradually build up your position in the commodities market after you have known the flow of the fluctuations and how it works.
That is basically how to invest in commodity. As with other investment plans, the most important thing for you to remember is that you need to ensure that before you start to invest, you should have enough saving or your emergency fund as you need to be prepared for any unexpected things such as job loss, illness, accident and other. You should have around a year or two funds for expenses before you start your investment. You should also set aside the fund for your living expenses and other things that you are paying monthly for the next 3 to 5 years.